The Treasury reviews its arrangements for the management of investments every five years. There are currently six funds which are partly or wholly managed by external investment managers:

National Insurance Investment Account;

Reserve Fund;

Public Service Employees Pension Reserve;

Hospital Estate Development Fund;

Notes Issued Fund (part of the Manx Currency Account);

General Development Reserve.

During 2005, The Treasury commenced a tender process to appoint investment managers for the period from 1 April 2006 to 31 March 2011. The tender process involved sending Invitations to Tender to financial institutions licensed by the Financial Supervision Commission to conduct Category 3, 4 or 5 Investment Business and any Bank that was licensed on the Island and was known to have a major investment arm as part of their Group. An advertisement was also placed in the local press.

Invitations were issued to a total of 65 institutions. A total of 19 tender proposals were received and considered by Treasurys Investment Committee. Following consideration of the tender proposals received, a number of institutions were short-listed and invited to make presentations to the Investment Committee in January 2006. After due consideration, 6 institutions were appointed (subject to contract) by the Treasury as the Governments investment managers for the period to 31 March 2011.

The six investment managers appointed are:

Capital International Limited

Helvetica (Isle of Man) Company Limited

Merrill Lynch Investment Managers (Isle of Man) Limited

RBS Asset Management Ltd

Scottish Widows Investment Partnership

Singer & Friedlander Investment Management (Isle of Man) Limited

The Treasury determines the amount from each Government Fund to be managed by each investment manager. Investment managers can be responsible for managing amounts in respect of a single Fund or a number of different Funds. Likewise, a Fund may be managed by a single investment manager or a number of different investment managers.

Under the new investment management agreements, each Fund is managed under either Absolute Return Mandate or Fixed Interest Mandate. The Absolute Return Mandates have a benchmark of UK Base Rate plus 2.5%. The Fixed Interest Mandates have benchmarks based on the FTSE UK Government 0-5 Year and 5-15 Year Total Return Gilt Indices.

The market value of the externally invested funds as at 31 March 2006 was as follows:

National Insurance Investment Account

£482.8m

Reserve Fund

£342.7m

Public Service Employees Pension Reserve

£95.4m

Hospital Estate Development Fund

£67.1m

Manx Currency Account

£55.4m

General Development Reserve

£15.9m

Further details of the above funds can be found in the Governments audited Annual Accounts (document number GD 012/06) and Detailed Government Accounts (GD 011/06).

National Insurance Fund  the purpose of the Fund is to provide sufficient funding to meet present and future National Insurance related expenditure. The National Insurance Fund comprises of an Operating Account and an Investment Account.

Reserve Fund  the Reserve Fund represents Government annual revenue accumulated surpluses less deficits. The current Budget strategy is to make progress towards the long term objective of increasing the Reserve Fund to a level equivalent to half of Governments annual Revenue Funded gross expenditure.

Public Service Employees Pension Reserve  the purpose of the Fund is to accumulate the receipt of Transfer Values in respect of incoming employees and to provide a long-term reserve to stabilise the annual finance of Transfer Values payable for outgoing employees and the long term pension liability.

Hospital Estate Development Fund  the Hospital Estate Development Fund was established by Tynwald in 1994 and its purpose is to meet the Loan Charges arising from the Capital Expenditure in respect of the New Hospital.

Manx Currency Account  the purpose of the Fund is to provide for repayment of Manx currency (coins and notes) issued by the Government.

General Development Reserve  the purpose of the Fund is to generate and accumulate investment income which will be available to further support economic and other developments either directly or in partnership with the private sector.

In addition to the six funds listed above, the Government has a number of other funds which are invested in cash deposits. As these are managed directly by the Treasury they were not part of the scope of the recent investment management tender process.